Chris Kimble, Founder of Kimble Charting Solutions shares his thoughts on US markets and a potential topping pattern. Listen closely because we do not have confirmation yet as the long term uptrend is still in place. However if we get a break lower the following move could be aggressive.
Chris Temple joins me today to recap the weak jobs data and the ECB statement from yesterday. Overall the global slowdown continues and central banks are more than a little worried about it.
Joseph Schachter, Founder of The Schachter Energy Report share his summary of the recent EIA reports for crude oil. He sends these summaries to his subscribers and shares them on Twitter. I reached out and he agreed to let me share these wit all of you.
Click here to find out more about The Schachter Energy report. If you are interesting in investing in the energy sector and even more so into some of the companies Joseph is one of my go to sources.
Here’s his summary this week…
The EIA reports for crude oil for both this and last week (I was travelling so no coverage last week) were impacted by large moves in net imports. Overall the reports were neutral. Specifically for the two weeks:
- This week commercial stocks rose by 7.1Mb versus the expectation of 1.6Mb; so initially this seemed bearish.
- However, in the detail the growth was due to net imports rising by 1.64Mb/d or 11.5Mb on the week surpassing the 7.1Mb rise by 4.4Mb.
- Last week saw a decline of 8.6Mb and this was due to a decline in net imports by 1.36Mb/d or by 9.5Mb almost reaching the level of the decline.
- Therefor these big weekly moves offset each other and are neutral.
- Year to date US consumption has grown by 1.2% to 20.79Mb/d.
- Today WTI is trading down 46 cents to US$56.10/b.
- After trading at a rally high of US$57.88/b last week we now expect the price of crude to start declining once we get into the shoulder season.
- A breach of US$54/b will start this erosion and could take oil below USW$50/b this month.
- In April we should start to see the seasonal shoulder season slower demand and inventories build up. If so, we could see prices decline to below US$45/b.
- A decline in oil related stocks should ensue and another great buying opportunity seen. It will be an attractive buy window but not as good as that seen during the tax loss selling season of 2018.
Raghee Hornor, Future and Currency Expert at Simpler Trading joins me to recap the growing trade deficit data as well as the Bank of Canada and ECB statements all from yesterday. As the US trade deficit continues to grow we are also seeing the central banks around the world turn more dovish. Although the Bank of Canada and ECB are on hold they are in a more dovish hold than the Fed. All this data and news needs to be filtered to determine what is driving the markets and even more so sentiment.
Although gold had a nice run there is still a concern that that monthly chart put in another lower high. What is even more concerning is the silver and GDX charts that are still in downtrends ever since the bounce in 2016. Jordan Roy-Byrne, Founder of The Daily Gold shares his thoughts on what the longer term charts are showing us.
I will be chatting with Ivan Bebek, Executive Chairman at Auryn Resources and Jeff Hussey, President and CEO at Osisko Metals on Friday. Please send me your questions to Fleck@kereport.com.
Here are the recent Auryn news releases…
February 15, 2019 –Auryn Appoints Jeffrey Mason to its Board of Directors
February 13, 2019 –Auryn Resumes Trenching at Sombrero Copper-Gold Project
Here are the recent news releases for Osisko Metals…
With the recent top in US markets on Monday the question now is if this pullback is a healthy consolidation or the start of a breakdown. Allison Ostrander, Director of Risk Tolerance at Simpler Trading shares her thoughts on the market set up. We also discuss the trend in retailers to close up shop and look more to online sales. Allison shares some of the retails that she thinks provide an investment opportunity.
Below is a breakdown courtesy of our good friend Peter Boockvar, Chief Investment Officer at Bleakley Advisory Group. He breaks down the key data released today which include ADP job numbers, the ever widening trade deficit, and the ECB’s statement this morning.
This post was taken off of Peter’s The Boock Report website. Click here to visit the site and follow along with all the other data and news.
ADP said the private sector added a net 183k jobs in February, not far off from the estimate of 190k. Due to benchmark revision over the past 12 months, January was revised up by 87k to 300k but that was given back over the prior months in 2018. Of note, small companies slowed their hiring with those with less than 20 employees shedding 8k jobs, the first time jobs here were trimmed since December 2016. ADP said “There was a sharp decline in small business growth as these firms continue to struggle with offering competitive wages and benefits.” For the jobs picture overall, Mark Zandi added this, “The economy has throttled back and so too has job growth. The job slowdown is clearest in the retail and travel industries, and at smaller companies. Job gains are still strong, but they have likely seen their high watermark for this expansion.”
The services sector added 139k vs more than 200k in the two prior months and is the 2nd least since last April. The goods side contributed 44k with construction hiring totaling 25k and manufacturing adding 17k.
Bottom line and smoothing out all the revisions, the 3 month average in job gains is still a solid 244k vs the 6 month average of 218k and 12 month average of 220k. If Zandi is right though and the slight upward trend in jobless claims is a tell, assume job hiring trends are closer to the 200k level than what was seen in December and January. The ADP figure today is about right in line with what the private sector estimate is for Friday’s BLS report at 180k. Lastly, keep in mind that jobs data typically lags.
The December trade deficit widened to $59.8b, about $2b higher than expected and November was revised up by $1b. This is the widest trade deficit since October 2008. Exports fell 1.9% m/o/m to the least since February 2018 and reflecting the global slowdown. Imports rose 2.1% m/o/m but after falling by 2.8% in November. Bottom line, a 10 yr high in the trade deficit will lead to a trimming of Q4 GDP estimates.
Bloomberg News is reporting that “ECB officials are poised to cut their economic forecasts by enough to justify another bout of loans for banks, according to people with knowledge of the matter.” These loans are in the form to Targeted Long Term Refi Operations and will mostly be used to refi what is coming due next year. The ECB meets tomorrow and they already have a balance sheet that is 40% of GDP and of course NIRP. There is really not much more they can do to deal with an economy that is slowing to almost flat line. As this is not unexpected, the euro is little changed but the inflation cut is sending European bond yields lower. The German 10 yr bund yield is down by 3 bps to just .14%. This in turn is leading to a rally in US Treasuries with the 10 yr yield approaching 2.70%. The ECB is now in a desperate situation.
Chris Vermeulen, Founder of The Technical Traders shares his thoughts on the recent pullback in gold. There is a debate over sentiment (which remains strong) vs momentum (which is negative) and which one will carry the market in the short term. We also look at the USD and the tech sector in terms of just how much more they can run.
Joel Elconin, Co-Host of the Benzinga Pre-Market Show joins me to share his thoughts on the swing day for the markets to start week. We also discuss move more into FAANG stocks recently and how that can drive markets. Finally we will be watching the jobs data on Friday and more importantly the market reaction.